The value of agriculture will fall $16 billion this financial year according to the latest forecast from the Australian Bureau of Agricultural and Resource Economics (ABARES).
Key points:
- Agricultural production will fall to $78b this financial year
- It will still be the third-highest figure on record
- Crop production is down $12b, and livestock is down $4b
David Galeano, acting executive director of ABARES, said: "Drier conditions and lower commodity prices mean the value of agriculture will fall to about $78 billion in 2023–24 and that's compared to a figure of $96 billion the year before."
While it is a big drop it will still be the third-highest figure on record.
The main cause is a big fall in crop production due to the El Niño and Indian Ocean Dipole climate patterns that have resulted in very dry conditions across most of Australia in spring, but cattle producers were also affected.
"It's across the board in terms of crops and livestock, with a $12 billion reduction in the value of crops and a $4 billion reduction for livestock," Mr Galeano said.
It has been a tough year for livestock producers with prices down 59 per cent in cattle, 40 per cent for lamb, and 75 per cent for mutton.
While recent rain has been a shot in the arm for livestock markets, ABARE warns that the amount of pasture around is well below 2022–23 levels.
Winter crops down significantly
Crop production is down 20 per cent to $46 billion, just below the 10-year average and well below last year's record figure.
"That's largely driven by reductions in wheat and canola by about $10 billion," Mr Galeano said.
"Places like Victoria faired much better than others.
"There was some very timely rain in that part of the world through October, but in the northern parts, drier conditions have had an impact, and it's similar over in the west," he said.
The winter crop has been harvested fast and early, partly due to the hot, dry finish and the lower yields, but better machinery and greater access to labour also sped things up.
A few of the cropping regions in the south-east of the continent were hit by rain during the harvest, so quality has suffered there.
Exports falling
Crop exports are expected to fall $11 billion due to increased production overseas and lower prices globally.
There is record production of corn and soybeans in the US, Brazil, and Argentina, but the price of some Australian exports, such as rice and sugar, will remain high due to restrictions on rice exports out of India and problems in sea freight out of Brazil limiting sugar shipments.
Summer planting
Queensland is the worst-affected state, with the area planted with summer crops forecast to fall by 48 per cent due to a lack of rain during the planting window.
WA is struggling to get a winter crop in as well with the size of the estimated crop to be 15 million tonnes, 11 per cent below the 10-year average.
Some good news
Good rain in recent weeks has turned things around for some regions.
It has spurred quite a few cotton growers to get out and sow late crops in northern NSW and southern Queensland, although the crop is still expected to be a fair bit lower than last year.
The dry spring means irrigation water has also been in short supply in Queensland, so the area planted is down 28 per cent in that state.
Horticultural production is hitting record levels as domestic consumption of fruit and vegetables continues to rise.
It is forecast to increase by $800 million to $17 billion.
Wine is turning the corner as well, with production forecast to go up $100 million to reach $1 billion due to a reduced disease impact from drier weather.